Toyota Pays $1.2B to Settle DOJ Probe

SAN FRANCISCO -- The US Department of Justice today officially concluded its criminal investigation into Toyota’s sudden acceleration case, which led to a recall in 2009 and 2010. Federal officials said the company intentionally issued misleading statements and concealed information about safety issues in Toyota and Lexus vehicles.

The Justice Department issued a deferred prosecution agreement with Toyota, under which the company must pay $1.2 billion, admit to misleading customers, and one count of wire fraud. The agreement also requires an independent monitor to assess Toyota’s safety-related policies, practices, and procedures for public disclosure and reporting.

“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth,” U.S. Attorney Preet Bharara for the Southern District of New York said in a release. “In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress... Companies that make inherently dangerous products must be maximally transparent, not two-faced. That is why we have undertaken this landmark enforcement action. And the entire auto industry should take notice.”

Toyota agreed to pay the $1.2 billion penalty -- the largest penalty of its kind ever imposed on a car company -- under a final order of forfeiture in a parallel civil action filed today in the Southern District of New York. Should the agreement pass judicial review, the government will defer prosecution on the information for three years and then seek to dismiss the criminal charges.

“This agreement will enable us to accomplish a great deal more than we otherwise would have. And my hope and expectation is that this resolution will serve as a model for how to approach future cases involving similarly situated companies,” Attorney General Eric Holder said at a press conference.

Toyota’s admission of guilt is a reversal for the company. In a report last year, Junko Yoshida noted Toyota “strenuously denied any malfunction in its vehicles' electronic throttle control system.”

According to the National Highway Traffic Safety Administration (NHTSA), Toyota deceived consumers and its US regulator by claiming that it had addressed the root cause of unintended acceleration through a limited safety recall of eight models for floor-mat entrapment, where an all-weather floor mat can “trap” a depressed gas pedal causing the car to accelerate to a high speed.

Although Toyota conducted a limited recall of some vehicles with floor mat issues in September 2009, the company delayed a broader recall until early 2010 -- despite internal tests warning of the dangers posed by other, unrecalled vehicle models, Holder said.

One engineer working at a Toyota facility in California said the Toyota Corolla was among the three worst vehicles for floor-mat entrapment. In October 2009, Toyota engineers in Japan circulated a chart showing that the Corolla had the lowest rating for floor-mat entrapment under their analysis. None of the findings were shared with NHTSA at the time.

“They mounted this cover-up despite widely-documented incidents, and even tragic accidents, like the one that took the lives of an off-duty California Highway Patrol Officer and members of his family,” Holder said.

In 2007, the company initiated a limited recall of 55,000 mats in the Lexus ES350 model after an internal investigation revealed that certain Toyota and Lexus models had design features that made floor-mat entrapment more likely. Toyota didn’t share these results with the NTHSA and internally touted the recall as a major victory, and according to a DOJ statement: “had the agency... pushed for recall of the throttle pedal assembly (for instance), we would be looking at upwards of $100 million + in unnecessary costs.”

“Today’s penalties follow NHTSA’s own record civil penalties of more than $66 million -- together, they send a powerful message to all manufacturers to follow our recall requirements or they will face serious consequences,” Transportation Secretary Anthony Foxx said.

Note that it was not just Michael Barr. Phil Koopman of Carnegie Mellon was also involved in analyzing the software. With two well-known embedded system experts involved, my confidence in their conclusions is pretty high. It is sad that the mainstream media still focuses on floor mats.

Car makers are more worried about -ve publicity than the fine. The fine typically mean to encourage car makers to do a better job in finding out the root cause than to actually hurt the company finanically. No doubt, $1.2B has made enough sound that Toyota has to sell million of car to make it back.

As vehicles become more intelligence, which equip with all kind of sensors and MCUs. The challenges of making sure safety first in embedding programming will become crucial. The reliability and stability of the MCUs are one of the foundations.

I have to agree that this "settlement" doesn't fix a d*mned thing. For one thing, unless I read the article too fast, there was no mention of getting to the bottom of the supposed flaw in the Task X implementation. If it's real, if Barr was not just blowing smoke, then when is it going to get fixed? And if it's false, then why isn't Barr being sued? If I owned a Toyota, I would want to know.

The public at large is still totally oblivious of the Task X issue. They go on repeating the urban myth of how much better these cars are than any other on the road.

As far as I can tell, this is just lawyers getting rich, and nothing being corrected.

...uhhhh, settlement, yeah, I mean settlement for Atourney Specific Holder. Actually I like better another word. One that rhymes with dakeshown. Let's see, only 17 thousand more of these billion dollar "settlements" and he'll have plugged the hole in his boss' national debt number. All while delivering a body-blow to Governement Motors main competitor for the Volt. Score!

Sorry for the blunt cynicism folks but it seems like this is what he meant by "great deal more" is in his proud proclaimation that "This agreement will enable us to accomplish a great deal more than we otherwise would have." None of us should be happy about this. It's agressive government behavior that should trouble everyone. No one outside of govt will see a dime of this money. It serves no one but A.S. Holder. Toyota will pay their price at the market. (They'll never see a dime of my money, btw. Recalls asside, I've never been more bored by a company's products.)

Yes, this is a nice little wrist slap that leaves owners of Camrys with defective ECMs out in the cold - unless they happen to have an accident due to the defect - in which case they, their passengers and others may be killed or injured.

Nobody is forcing Toyota to either buy back these defective vehicles or correct the underlying defect.

Thanks for the compliments, Parris. Junko Yoshida has been really on the ball with this story.

I think it will be particularly interesting to see what the feds find out from looking into Toyota's PR practices. I suspect that this slap on the wrist might not change a whole lot for Toyota, long term.

Another excellent article from EE Times and its reporters. Thanks for following Toyota's sudden unintended acceleration problems and exposing the facts.

With a 60 billion dollar stash of cash, the Recall King isn't worried about a few billion bucks to settle lawsuits and buy its way out of a federal criminal case. The REAL story - which EE Times has done a SUPERB job of reporting - is about renowned embedded systems expert Michael Barr finding bugs in Toyota's electronic throttle control software, prompting the guilty verdict in Oklahoma (there was also that pesky evidence of 150 feet of skid marks from the plaintiff's tires), the billion dollar economic loss settlement in December of 2012, and Toyota's current interest in out-of-court settlements for remaining lawsuits and criminal complaints regarding sudden unintended acceleration. Mainstream media is doing everything it can to keep Michael Barr's findings quiet.

I learned my lesson about the Recall King when the engine disintegrated in my MR2 Spyder. Owners' complaints have been all over the Internet for years, Toyota continues to stonewall. Been bloggin' 'bout Toyota at http://www.uc2.blogspot.com